While shop vacancy rates in the UK are at an all-time high, London’s top streets are commanding higher premiums than ever, despite the economic downturn.
Why are we talking about it now?
In a bid to secure a site on London’s famous shopping destination Regent Street, SuperGroup is to fork out a hefty £10m to take Austin Reed’s iconic store on the street. As revealed by Retail-week.com last week, Austin Reed subsequently took on the Aquascutum lease and was understood to have paid £5m.
Any other eye-watering deals in the last 12 months?
Yes. Hollister paid up to £10m to outbid the likes of Superdry to secure the store currently occupied by National Geographic on Regent Street. In November, Forever 21 paid a whopping £13.7m for the keys to HMV’s Oxford Street store on the western end of the street. Desigual signed for a store on Oxford Street in August in a record-breaking deal that will see the Spanish fashion retailer paying about £710 Zone A rent in the former Disney Store shop.
On average, prime pitches on Oxford Street go for £540 and £560. Sources say that, had a new lease been drawn up on the HMV store now in Forever 21’s hands, a new Zone A record would have been set.
Where are the hot spots?
Bond Street, Marylebone High Street, Oxford Street, Regent Street and South Molton Street. Savills director of Central London retail Anthony Selwyn says the top streets are becoming “much more defined than ever, so retailers’ requirements are becoming much more specific”, meaning they are prepared to pay substantial sums for the right location. He adds: “Retailers won’t take any deal. They wait for the right opportunity.”
Is a trend developing?
Another property agent believes that the high premiums being paid by retailers in the West End could continue, despite the economic downturn, due to a lack of good space coming up in desirable locations. The highest prices are being paid off-market for stores that are not even up for sale.
“The market is extremely strong,” says Selwyn. “Where you’re seeing the big deals is on big space, and space that isn’t on the market. Everything’s for sale at a price. You could buy anything on Oxford Street if you had enough money.”
How does it compare with the rest of the UK?
It doesn’t. Vacancy rates stand at 14.5% in the UK, according to the Local Data Company. In those places that are suffering the most, there will be no bidding wars driving prices up. Retailers will be getting good deals by incentives and paying low rents, as landlords struggle to find tenants for their units.